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Definition

Compensable Factor

Definition (1):

The compensable factor is a fundamental compensable element of a job, such as skills, effort, responsibility, and working conditions. Identifying these factors plays a central role in job evaluation. One can usually compare each job with all comparable jobs using the same compensable factors.

Definition (2):

The compensable factor is one of the criteria used for evaluating a job and based on which the employees’ salary/wages can be computed. It seems the company is willing for paying based on particular compulsory competencies or other factors for eligibility. These factors are generally defined and determined depending on the objectives and values of the company.

Each of these factors has its own value and weight in the final evaluation process. According to the Equal Pay Act, 1963, the four most basic of these factors are skills, effort, responsibility, and working conditions. Generally, an evaluation process has 5-12 of these factors. These factors can be different depending on different evaluations.

Compensable factors can serve us with the following advantages:

  • It eliminates obscurity from the evaluation process.
  • It clearly states the criteria to the candidates.
  • Each factor has a specific value in the process of selection.
  • It is applicable for a wide variety of jobs.
  • It expresses the job’s value in monetary value.
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